Business/Economy, Denver, Featured, Joshua Sharf, Politics, Uncategorized

Sharf: ‘Social justice’ leads Denver’s minimum wage push–because the economics don’t work

Several weeks ago at George Washington High School, the Denver government held one of its six planned “town halls” to discuss the planned boost of the city’s minimum wage to $15 an hour.

Rarely has so much social justice done so much violence to so much basic economics.

The meeting was dominated by representatives of and beneficiaries of Metro Caring. Metro Caring provides food and nutritional information to the poor; it also helps with benefits enrollment, taxes, and utilities.

Opposing the wage increase were several local businessmen, including several restauranteurs.

One restaurant owner noted that the increase would disproportionately go to tipped workers, leaving less money for those “in the back of the house” like dishwashers and busboys, who make only the mandated minimum hourly wage. A man who owns a sandwich shop noted he’ll have to raise prices, saying that he’d love to pay his employees more. Another business owner noted that he doesn’t control the prices he can charge. As a medical supplier his customers are on a Medicaid schedule, so he can’t even pass along wage increases.

These businessmen face these economic realities every day. Adding to their costs makes it harder for them to stay open.

The earnestness and good faith on the part of the business owners contrasted sharply with the condescension from some of the workers and non-profit volunteers.

It didn’t help the optics that all of the business owners represented were white men, while almost all of those arguing for the increased wage were women and minorities.

One woman with Metro Caring jumped in to lecture these businessmen that, “It’s a privilege for them to own businesses. It’s not a privilege for people to work for you.”

A representative of the Denver Foundation stated that foundation rarely gets involved in political questions, he said, but this particular issue emphasized the values the foundation cares about, particularly that it would disproportionately help black and latino workers.

Perhaps they were merely following the mayor’s lead. The presentation claimed that the minimum wage increase would benefit nearly 25% of all Denver workers, including 38% of blacks and 50% of Hispanics, as though the racial makeup of the beneficiaries somehow justifies the damage done.

Those numbers come from a round-about estimate by the liberal Bell Policy Center at the request of the proponents in the city government. When I asked why they didn’t simply do a survey, they answered that it would be difficult to get 100% participation. That was blowing smoke. Surveys rely on representative, not total participation. The city government has a list of businesses operating here, and since they all pay the head tax, it also has a solid read on the number of employees. One is hard-pressed to escape the conclusion that the mayor’s office looked for a study that would get the answer it wanted.

Maybe we can’t blame Fight for 15 advocates for going full social justice warrior (SJW), though, since their economic arguments are ambiguous at best. So ambiguous, in fact, that they blithely dismissed without discussion the numerous studies casting doubt on the harmlessness of such hikes. One might expect better from the self-appointed “reality-based community.”

New York’s minimum wage increase has led to restaurants cutting hours, laying off employees, and raising priceshurting the very people the increase was supposed to help. Restaurant employment has fallen by rates usually associated with recessions.

There is evidence that Seattle’s minimum wage increase has force child care centers to increase prices and cut staff. Given that child care is already an enormous expense for working-class families, that extra few dollars an hour may well head right back out the door. Other University of Washington (UW) studies have shown that total payroll at the low end of the scale actually fell, although total restaurant employment appeared unaffected.

One 2018 UW study showed that the benefits mostly accrued to people at the higher end of the affected wage range, and even then mostly because they were able to replace lost hours with employment outside the city. Can Denver count on Aurora and Westminster to bail out its workers?

Unsurprisingly, at least one study shows that higher minimum wages speed restaurant failures, especially at the cheaper end of the scale, where low-wage workers are more likely to eat, while deterring entrepreneurs from opening replacements. Since those holding automatable jobs are more likely to be replaced, McDonald’s and Burger King will use kiosks, to the detriment of the individual restauranteur so held in contempt at that meeting.

Perhaps somewhat more surprising is that minimum wage increases result in more property crime arrests among 16-to-24 year-olds, especially in larger, denser cities, perhaps because those entry-level workers have a harder time finding jobs.

A recurring theme at the meeting was the cost of housing – until the moderator shut off that avenue of discussion. Planned density has increased the cost of living in any number of ways, sucking away residents’ money and time. One participant warned about the dangers of pricing low-end consumers out of the city, but it’s the city government who is guilty of that, not business owners.

Trying to scrape by on minimum wage as an adult is miserable. Things that most people consider casual purchases are luxuries to those at the low end of the wage scale. Rather than boondoggles like the carbon tax and the new city-level sustainability office, the city council and mayor should be looking at rolling back regulation and red tape that make life in Denver more expensive.

Joshua Sharf is senior fellow in fiscal policy at the Independence Institute, a free market think tank in Denver.

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